The Four Steps of Developing a Medical Practice Compliance Program

Dallas L. Alford IV
February 7, 2012 — 1,370 views  
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The health care regulation laws that now exist were created to ensure that the interest of every medical group will be protected. Failing to abide by such laws could pose significant risk due to fines, penalties and even potential criminal charges.  Benefits of a well designed compliance plan consist of the following at a minimum:

·         Increase speed and minimize improper payments of claims

·         Minimize billing mistakes

·         Reduce the odds that your physician group will be audited by a governmental agency

·         If a governmental agency does conduct an audit, a compliance plan can reduce any negative outcome.

There is no exact defined compliance plan that will meet the needs of every healthcare organization.  A compliance program must be designed to conform to a specific organization so that it can be supported by available resources.

Four- Step Process

The development of a physician group corporate compliance program consists of four steps:

  • The first step is merely recognizing the importance of creating a practical approach to maintaining an effective compliance program.


  • Second is ensuring your organization's ruling authority is committed to implementing and maintaining a formal compliance plan.  The compliance program would be a significant part of any organizations policy and procedures and it would be management's commitment of supporting the program with the appropriate necessary resources.


  • It is essential to form a committee that would be solely devoted to the task of implementing and managing the compliance plan. Assigning members within all departments of the organizations as committee members would ensure companywide cooperation on the corporate compliance program.


  • The last step is to prepare responsibilities of the compliance committee and delegate them to appropriate staff. The practice leaders of an organization must initiate this and utilize allotted resources in designing the compliance effort.


There is one stipulation that remains the same across the board regardless of the size of the health care entity and that is the "code of conduct". This consists of the policy and procedures that dictates the ethical business processes within any organization. The program must be a direct expression of the company's intention of conducting business in an ethical manner.

Development of Policies

Developing and documenting policies is the next step in designing a compliance program. It is critical to look at the group's risk factors and come up with policies and procedures that would appropriately address the risks of the physician group.  This would reduce and help mitigate any risk associated with any unlawful conduct within the organization.

The following are the essential elements of a formal compliance plan:


  • Auditing and monitoring; of coding and billing


  • Training and education;


  • Responding appropriately to detected offenses and initiating corrective action plans.
  • Assignment of a Formal Compliance Officer.
  • Developing open lines of communication
  • Human resources screening such as performing background checks.


Proper training and education for all staff is the foundation of a positive compliance culture, therefore the policies must clearly indicate the methods, subject matter and scheduling of when trainings will occur.

Auditing and Monitoring

It is critical that the compliance plan consist of both on-going auditing and monitoring of coding and billing. This will help organizations identify, prevent and correct any incorrect billing or coding and implement internal controls to ensure that such errors are mitigated and reduced.  Depending on the resources at hand, some organizations choose to do this internally or hire third party consultants to assist with the auditing and monitoring of billing and coding.

Risk Prevention Requires Detection

An effective compliance program must be capable of detecting risk factors. Review of the following may lead to identification of risk areas:

-          Internal processes and documents (billing and performance surveys)

-          Complaints (staff and patients)

-          Coding and billing errors

Risks that are communicated by the Office of Inspector General's (OIG's) on their fraud alerts and annual work plan absolutely require reviews.  This is becoming more important as scrutiny from governmental agencies continues to significantly increase.

Policies on reporting violations must be clearly stated in the compliance plan.  Discipline must coincide with the particular violation that was committed and the organization must show through the formal compliance plan that it does follow through with enforcement of disciplinary action.

All staff must be aware of these policies and this should be reflected in the documentation that is maintained by the Compliance Officer as a result of the compliance plan.

Program Supervision

The organizations leadership has to set the tone for an effective compliance program; hence both administrative and medical directors must have a thorough understanding and participate in the supervision of the compliance program components.

Through simple systems of reporting relevant concerns, open lines of communications will be achieved. Such systems include hotlines and anonymous reporting procedures. In addition, policies to protect informants against retaliation must also be directed.

The compliance officer must be a high-ranking person. This individual will directly report to the governing authority about the timely updates of the program's effectiveness. The governing within an organization will vary depending on the size of the organization.

Program Execution

An effective compliance program cannot be executed unless it meets an organization's requirements in terms of the size of the practice, known risk factors and the existence of the necessary resources to manage such risks.  The final and hardest step of developing and implementing a compliance plan is the actual execution of putting the plan in place.

The compliance officer typically oversees the execution of the plan.  The officer must ensure that it follows the code of ethics, program polices and procedures that were agreed upon by management of the organization.

Moreover, governing authority is also ultimately responsible in supervising the implementation. To continually support the compliance program to make sure it remains in place, it is important to have the buy-in of all leaders.

Monitoring Program effectiveness

Accountability and responsibility are important factors in achieving successful performance of a compliance program. To create an accountable and responsible group culture, it is necessary to conduct a well -defined and properly structured program that is constantly monitored.

The following assures proper monitoring:

-          Dividing and assigning roles and responsibilities to staff;

-          Setting and planning measurable goals and objectives;

-          Periodic evaluation of results.

Corporate Compliance Benefits Practices and Patients

A formal compliance program is without a doubt a necessity for any medical practice regardless of size. Practices that do not utilize a compliance programs are putting themselves at risk of facing avoidable risks.

Effective compliance programs provide group awareness of the legal and ethical procedures applicable to their practices. Every practice must identify their areas of risk, have their own specific policies and procedures and develop a compliance culture that will ensure the compliance plan will be taken seriously and implemented effectively.

A well defined compliance program could be your organization's life raft in today's health environment due to the Medicare RACs, ZPICs and Medicaid MIC audits that are currently in process.




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Dallas L. Alford IV

Dallas L Alford IV, CPA is a licensed Certified Public Accountant in the state of North Carolina and owner of Atlantic Financial Consulting, a consulting firm that provides comprehensive medical billing services, practice management consulting, coding audits, Medicare compliance, and other general medical practice consulting services. To learn more about Atlantic Financial Consulting and to sign up for their monthly educational newsletter, you may visit their website at or contact Dallas L Alford IV, CPA at 1 888-428-2555, Ext. 200